Part 1 of a 2-part series.
It might happen when grocery shopping at the supermarket, while you are at the salon getting your hair done, or as you are driving down the road: a new business idea hits you, and it doesn’t let you go!
While you might feel the urge to drop everything else and jump on it, you should think rationally about any new business endeavor. How can you test your business idea without going all in right away? What can you do to validate it (that is, confirm that it has potential worth pursuing) while expending the smallest amount of effort, time, and money possible?
In this article I present a number of suggestions on how to evaluate your business idea, how to test the market, and where to find your first clients!
1. Determine What Problem Your Solution Is Solving
Let’s be frank: there isn’t any product or service that hasn’t been invented yet. So once you get to the computer to start working on your business idea, do not get discouraged and abort your mission once you find out your product isn’t 100 percent unique.
Instead, seize the opportunity that lies in the details.
You do not need to reinvent the wheel. Use the existing competition to your advantage and use their performance data to better understand the market, the clients, the product, and the price structure. Find out what works for them and where they need to improve — and integrate those elements into your own product!
Better yet, nail the way you communicate with your customers. Here’s how: instead of presenting a long list of product features, tell your customer what problem your product is solving in one clear sentence. Here are two examples:
- “Search and find the best event venues in Miami Beach”
- “Your one-stop pilot job search website”
Both are clear statements of what each company does, without having to attach any additional information to make their product/service understood.
Keep this in mind as the core of your business idea; the very heart of what you are doing and the specific problem you are solving.
2. Lock Down the Details of Your Business Idea
Creative ideas rarely come in an orderly fashion. When we are visited by our muse, the details can often flood our brain in the most unstructured way. That’s why, in order to shed full light on a brand-new business idea, you’ll have to organize your thoughts, and the best way to do this is by writing them down.
If you’re thinking I’m about to advise you to write a 40-page business plan, don’t worry. Formal business plans are for investors, partners, and other external parties — who often never read the full document.
What you need is a simple and concise summary of your business concept, a one-page document that you can refer back to anytime you need to touch base with your original thoughts (be it to stay on track or to alter your path … but we’ll get to this later!).
There are a hundred ways to summarize your business idea, and one of the easiest methods is a Business Model Canvas. Whether you use pen and paper or a pre-drafted version like Business Model Fiddle, this one-pager captures every key aspect and makes you consider each important element of your future business.
Business Model Canvas
Additionally, in order to practice your pitch (the introductory presentation of your business idea) you can use Plan Cruncher, a fun and easy tool that helps you boil it down to the most important facts.
Plan Cruncher
3. Embrace the Lean Startup Model
Now that you’ve organized all the thoughts around your idea, it’s time to trim down your business concept. Your goal here is to reduce your business idea to its most important core feature (highlight it on your business model canvas!), excluding all features that can be seen as “additional” and can be added on later. The result is your “lean” business concept, a slim version of the fully loaded package you have just assembled.
So what does “lean” mean?
In recent years many startups have followed a lean methodology, especially technology startups. In short, a company launches a very basic version of its product (it is called the Minimum Viable Product) to validate their idea and to generate early interest in the product and the company. This strategy allows the company to test the market and validate whether consumer interest and opportunity exists, and helps them reduce initial production cost, as they have only focused on the central feature of their product.
The company determines a trial period and sets a number of goals that will be revisited at the end of that time frame. If the goals have been met, the product can be expanded with more features, or altered as the market requires.
Knowing the core feature of your product or service is the key to making your business idea test work.
Part 2: Beginning to Build and Test
In Part 2 of this article, I explain how to build a simple website to measure interest and impact; how to choose the right marketing mix for your business idea; and how to set goals, evaluate them, and work toward the results.
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